Elon Musk’s Tesla ‘not interested’ in manufacturing in India, minister says

Tesla is no longer expected to manufacture electric vehicles in India despite government incentives and meetings with Elon Musk, a senior federal minister has confirmed.

Heavy industries minister HD Kumaraswamy said on Monday that the US company had not shown interest in the Narendra Modi government’s new EV manufacturing scheme, marking the first public admission that efforts to woo the carmaker had fallen through.

“Mercedes Benz, Skoda-Volkswagen, Hyundai, and Kia have shown interest. Tesla, we are not expecting from them,” Mr Kumaraswamy told reporters, adding that the company was instead looking to open two retail showrooms. “They aren’t interested in manufacturing in India.”

Tesla had participated in early discussions under the country’s EV policy but reportedly did not join later rounds, according to officials quoted by the news agency PTI.

The clarification came as the Modi government issued formal guidelines this week for its EV policy, offering reduced import duties to foreign carmakers that committed to investing at least $500m and starting local production within three years.

The policy, in the works for a year, was originally designed to lure Tesla to set up manufacturing in the country.

Carmakers will be allowed to import a limited number of EVs at a reduced duty of 15 per cent versus the current 70 per cent if they commit to investing around $500 million to manufacture in the country, the heavy industries ministry said.

Mr Musk previously said high import duties were preventing Tesla from entering the Indian market. He later met the prime minister in Washington DC and discussed India’s potential in tech and innovation.

But despite such outreach, Tesla has backed away. The American company's original entry plans were shelved in 2022 after India insisted it begin local manufacturing rather than importing vehicles for a test run. Mr Musk later said he was “trying to figure out the right timing” for investment.

Analysts argue that India’s EV market may not yet be ready for Tesla’s premium models. EVs currently make up less than 3 per cent of passenger car sales in the country and domestic alternatives can cost half as much as Tesla’s cheapest offering.

Insufficient charging infrastructure and poor road conditions may also be deterrents.

Tata Motors currently dominates the Indian EV market with more than 60 per cent share, followed by MG Motors at 22 per cent.

Globally, Tesla is facing growing pressure from rivals, especially China’s BYD. Its sales slumped to a three-year low in early 2025 amid a political backlash over Mr Musk’s ties to US president Donald Trump. He stepped down from his government advisory role last week.